Ravenda Homes Ltd. v. 1372708 Ontario Inc., 2010 ONSC 6338

CITATION: Ravenda Homes Ltd. v. 1372708 Ontario Inc., 2010 ONSC 6338

COURT FILE NO.: DC 10-191

DATE: November 17, 2010

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: Ravenda Homes Ltd, Plaintiff (Respondent)

AND:

1372708 Ontario Inc., Defendant (Applicant)

BEFORE: Matlow, Heeney and Mackinnon JJ.

COUNSEL: M. Emery, for the Respondent

R. Harason, for the Applicant

HEARD: November 17, 2010 at Hamilton

ENDORSEMENT

[1] Section 71(3)(b) of the Construction Lien Act provides that no appeal lies from an interlocutory order made by the Court. As advised orally at the conclusion of argument, we are of the view that the orders of Quinn J. dated July 15, 2010 are interlocutory, and the appeal of those orders is dismissed for lack of jurisdiction. We arrived at that decision for the reasons that follow.

[2] The facts can be briefly stated. The plaintiff commenced two separate construction lien actions against the defendant, by Statements of Claim both dated October 19, 2006. Construction Liens and Certificates of Action were registered against the lands in question.

[3] The defendant delivered its Statement of Defence and Counterclaim in each action on September 14, 2007. No other steps were taken until counsel for the plaintiff, cognizant of the fact that the two year deadline for setting the actions down for trial provided for in s. 37 of the Act was looming, delivered a Reply and Defence to Counterclaim in each action on October 15, 2008. On October 16, 2008, the plaintiff delivered Trial Records and set each action down for trial, so as to meet the statutory deadline.

[4] On October 23, 2008, the defendant amended its Statement of Defence and Counterclaim in each action, and delivered them one week later. They purported to do so pursuant to rule 26.02(a), which permits a party to amend its pleadings without leave while pleadings remain open.

[5] The defendant then brought a motion before Quinn J. for an order declaring that the construction liens had expired, vacating the certificates of action and dismissing both actions. The defendant’s argument, in a nutshell, was that since the plaintiff delivered its Reply and Statement of Defence to Counterclaim in each action on October 15, 2008, pleadings remained open for a further 10 days, during which period the defendant had the right to file its own Reply to the Statement of Defence to Counterclaim. Thus, the plaintiff could not set the action down for trial on October 16, 2008 as it purported to do, because pleadings remained open. Under rule 48.01, an action cannot be set down for trial until after the close of pleadings. It was therefore argued that the plaintiff failed to meet the statutory deadline, and the liens automatically expired under s. 37.

[6] Quinn J. dismissed those motions. As a result, the liens and certificates of action remain alive, and both actions remain to be dealt with at trial on their merits. No substantive rights of the parties have been finally disposed of, and the real matters in dispute remain to be determined. Accordingly, the orders in question are not final orders: Hendrickson v. Kallio, [1932] O.R. 675 (C.A.) at 678, cited with approval in Plan Group v. Bell Canada, 2009 CarswellOnt 3807 (Ont. C.A.) at para. 12.

[7] In the course of his ruling, Quinn J. noted that the Act specifically refers to the following pleadings: Statement of Claim, Statement of Defence, Counterclaim, Crossclaim and Third Party Claim. However, it does not contain any reference to a Reply. He ruled that the procedure provided by the Act and the procedure under the Rules that provide for a Reply are inconsistent, such that the Act must prevail. He ruled that a Reply may be filed only with leave of the court. Based on this reasoning, he concluded that pleadings were closed upon the delivery of the Statement of Defence to Counterclaim portion of the pleadings delivered by the plaintiff on October 15, 2008. It followed that the plaintiff had the right to set the action down on October 16, 2008.

[8] Quinn J. ruled that the Reply portion of the pleadings delivered by the plaintiff on October 15, 2008 was a nullity, as were the Amended Statements of Defence and Counterclaim prepared by the defendant, dated October 23, 2008 (since they were delivered after the close of pleadings, without leave of the court).

[9] Mr. Harason, for the defendant, argues that the orders of Quinn J. declaring these pleadings to be nullities are final orders, and that an appeal from those orders is properly before this court.

[10] With respect to the Reply of the plaintiff, he points to certain admissions contained within that document, and asserts that his client will be denied the right to rely on those admissions at trial. In our view, this does not amount to the final determination of a substantive right of a party to this proceeding. Taking away a formal admission merely goes to the issue of proof of that particular fact, and may require the defendant to lead evidence of that fact at trial. As Mr. Harason concedes, the ultimate impact of doing so will not be known until trial, which is precisely the point. It is not until trial that the substantive rights of the parties will be determined, based on the evidence, including any admissions, that is before the court at that time.

[11] As to the declaration that the Amended Statements of Defence and Counterclaim dated October 23, 2008 are nullities, this order does not finally determine any substantive rights of the defendant either. There is no question that an order striking out all or part of a Statement of Defence is a final order, because it finally disposes of the issues raised, and precludes the defendant from relying on any defences included therein at trial: see Four Seasons Travel Ltd. v. Laker Airways Ltd.(1974), 6 O.R. (2d) 453 (Div. Ct.); Canadian Imperial Bank of Commerce v. Lido Drywall Inc., [1995] O.J. No. 3740 (Div. Ct.).

[12] However, the order of Quinn J. did not strike out all or part of a Statement of Defence and preclude the defendant from relying on any defence at trial. It merely ruled that the document that had been filed was a nullity. Any defences raised in the amended pleadings remain available to the defendant to assert, if it wishes to take steps to do so.

[13] The defendant has a right to bring a motion under rule 26.01 to amend its Statement of Defence and Counterclaim in each action. Two aspects of that rule merit emphasis. First, such a motion may be brought “at any stage of an action”, including after the close of pleadings. Second, “the court shall grant leave to amend”, unless non-compensable prejudice exists. Thus, the presumption is that such an amendment would be granted.

[14] Since that right to amend remains available to the defendant, it cannot be said that the order of Quinn J. has denied the defendant the right to rely on any particular defence at trial. If the defendant brings a motion to amend, and that motion is denied, that would be a final order for purposes of appeal. The order of Quinn J. is not.

[15] The appeals are, therefore, dismissed. Costs are awarded to the plaintiff (respondent) fixed at $8,500 all inclusive.

Matlow J.

Heeney J.

Mackinnon J.

Date: November 17, 2010